Telecom
Product Recall Risks Growing In Size & Number, Technology Drives New Triggers- Allianz
By peter oluka
Defective product risk is an increasing peril for companies, causing significant financial damage, according to a Allianz Global Corporate & Specialty (AGCS) report.
A faulty pedal causes a car to inadvertently accelerate. An outbreak of contaminated peanuts results in a 25% industry-wide reduction in sales. Each of these incidents triggered major product recalls, resulting in billion dollar losses.
Product-related risk is one of the biggest perils facing businesses today, with recall exposures having increased significantly over the past decade, bringing the potential for larger and more complex losses than ever before, warns insurer Allianz Global Corporate & Specialty (AGCS) in a new report.
It highlights the automotive industry as being the most impacted by product recalls, followed by the food and beverage sector, based on analysis of insurance claims.
“Product recalls have risen steadily in the past decade. We are seeing record levels of recall activity in size and cost today,” said Christof Bentele, head of Global Crisis Management at AGCS. “Tougher regulation and harsher penalties, the rise of large multi-national corporations and complex global supply chains, growing consumer awareness, impact of economic pressures in research and development (R&D) and production and even growth of social media are just some of the contributing factors behind this.”
Defective products not only pose a serious safety risk to the public but can also cause significant financial damage to the companies responsible.
Defective product/work-related incidents have caused insured losses in excess of US$2 billion over the past five years, making them the largest generator of liability losses, according to analysis, of insurance industry claims by AGCS.
Recall claims are a major contributor to this total, alongside product liability claims.
The report “Product Recall: Managing The Impact of the New Risk Landscape” analyzes 367 insurance industry product recall claims from 28 countries across 12 industry sectors between 2012 and the first half of 2017.
Overall defective product or work is the major cause of recall claims, followed by product contamination. The average cost of a significant, incident is in excess of US$12 million (€10.5 million), with the costs from the largest events far exceeding this total.
Over 50% of losses arise from 10 incidents. The IT/electronics sector is the third most affected industry after automotive and food and beverage, according to the claims analysis.
Automotive recalls most expensive and large-scale due to “ripple effect”
Automotive recalls account for over 70% of the value of all losses analyzed, which is unsurprising given recent record levels of activity in both the US and Europe.
“We see an increasing number of recalls with higher units in the automotive industry,” said Carsten Krieglstein, regional head of Liability, Central & Eastern Europe, AGCS. “This is driven by factors such as more complex engineering, reduced product testing times, outsourcing of R&D and increasing cost pressures. The technological shift in the automotive industry towards electric and autonomous mobility will create further recall risks.”
One of the largest recalls to hit the auto industry to date, involving defective airbags, is expected to result in some 60 to 70 million units across at least 19 manufacturers being recalled worldwide. Costs have been estimated at close to US$25 billion.
This incident exemplifies the growing “ripple effect” which impacts the automotive sector, but also other industries. Given the use of many common components, a single recall can impact a whole industry.
Food and beverage is the second most impacted sector, accounting for 16% of analyzed losses with the average cost of a significant product recall claim almost US$9.5 million (€8 million). Undeclared allergens (including mislabeling incidents) and pathogens are a major issue, as is contamination from glass, plastic and metal parts.
Malicious tampering and even extortion incidents pose an increasing threat, as well as the growth of “food fraud”, which has become a major issue, resulting in reputational damage and major losses, as seen in the horse meat scandal in Europe four years ago.
The report also notes that products from Asia continue to account for a disproportionate number of recalls in the US and Europe, reflecting the eastwards shift in global supply chains and historically weaker quality controls in some countries.
Yet increasing safety regulation and consumer awareness is ensuring recall activity is also rising across Asia.
Allianz Global Corporate & Specialty Product Recall Risk Cyber
Technology to prevent and drive future recall risks
The report also identifies emerging recall triggers that will drive future risks and claims, largely stemming from new technologies.
Advances in product testing such as genome-sequencing technology will make it easier for regulators and manufacturers to trace contaminated products in future, potentially saving lives, but also potentially spiking litigation activity, as liable parties can be more easily identified.
Cyber recalls may become an increasing reality. Hackers could change or contaminate a product by controlling machinery in automated production plants.
“Cyber is currently an underestimated risk,” said Bentele. “We have already seen recalls due to cyber security vulnerabilities in cars and cameras.” Innovative but untested technologies such as artificial intelligence and nanotechnology could also transform recall risk.
Social media is a fast and effective way of communicating with customers but can also exacerbate recall risk if not well-managed. “Social media is a real game-changer for product recall,” says Stewart Eaton, Head of Product Recall, UK, AGCS. “An erroneous post or tweet can cause reputational damage and directly impact the size of a recall, meaning companies need to react faster than before.”
Recalls for ethical and reputational, rather than safety, reasons are also on the rise, such as in cases where child or slave labor has been used in the supply chain or where food such as halal or vegan has been mislabeled or counterfeited. “There will be incidents when there is no legal requirement to recall but it is the right thing to do. This is a genuine business risk which companies have to be prepared for,” Bentele said.
Pre-event crisis management as part of corporate DNA
Pre-event planning and preparation can have a big impact on the size of a recall and the financial and reputational damage sustained.
As part of a holistic risk management program, specialized product recall insurance can help businesses recover faster by covering the costs of a recall, including business interruption. It also provides access to crisis management services, and consultants, which can test a company’s procedures and offer global support in areas such as regulatory liaison, communications, product traceability and tampering investigations and even genome sequencing and DNA testing to understand a product contamination.
“There is now much more attention on how companies deal with defective or contaminated products, how responsive they are and how resilient their safety systems are. More than ever consumers are also part of the agenda and are driving company behavior by making their choices subject to how companies deal with crises. A company that embraces crisis management, and makes it part of its DNA, is far less likely to suffer a major incidence,” said Bentele.
Telecom
IHS Nigeria Hosts Telecom Industry Stakeholders to Discuss Protection of Critical National Infrastructure in Lagos State
IHS Nigeria, part of the IHS Holding Limited (NYSE: IHS) (“IHS Towers”) group, one of the largest independent owners, operators, and developers of shared communications infrastructure in the world by tower count, recently hosted a high-level meeting of stakeholders in the telecommunications industry including regulators and law enforcement agencies, at its corporate headquarters in Lagos.
The meeting was organized to develop a multi-stakeholder action plan for the protection of Critical National Information Infrastructure (CNII) assets in Lagos state.
Recognizing the importance of communications infrastructure as the backbone of national security, economic growth and social cohesion, the stakeholders at the meeting convened under the umbrella of the Association of Licensed Telecoms Operators of Nigeria (ALTON) agreed on the urgent need for collaborative solutions to ensure the protection of these vital assets.
The meeting was attended by senior representatives from the telecommunications stakeholder groups and regulatory bodies including the Nigerian Communications Commission (NCC), the Association of Licensed Telecoms Operators of Nigeria (ALTON), Association of Telecommunications Companies of Nigeria (ATCON) and the Lagos State Infrastructure Maintenance and Regulatory Agency (LASIMRA).
Also in attendance were representatives from the Mobile Network Operators (MNOs), and InfraCos as well as the Nigeria Security and Civil Defence Corps (NSCDC), the security agency tasked with the protection of Critical National Infrastructure across the country.
Following extensive deliberations, the stakeholders resolved to establish a working group dedicated to addressing key industry challenges, including the vandalization and theft of telecommunications infrastructure, arbitrary shutdown of base stations, fiber cuts due to road construction and the denial of access by unauthorized individuals by leveraging technology for real-time monitoring and protection, strengthening security measures around telecommunication sites and collaborating more with the security and regulatory agencies to mitigate these challenges.
The stakeholders underscored the need to prioritize deterrence and prevention of these incidents and highlighted the importance of public awareness campaigns to sensitize the host communities and public of the need to protect telecommunications infrastructure in their localities.
Dapo Otunla, Senior Vice President & Chief Corporate Services Officer of IHS Nigeria, commented, “The protection of Critical National Information Infrastructure (CNII) has been a critical concern for all industry stakeholders.
“We are experiencing daily losses of assets, which significantly impact on the quality of service delivered to subscribers. Addressing these issues is paramount to sustaining Nigeria’s digital ecosystem and meeting regulatory expectations.”
Over 1ooo athletes are already set to participate in the upcoming MTN Champs Continental Relays, taking place between April 9 and April 12 at the UNILAG and Yabatech Sports complexes. Organisers anticipate even more registrations before the April 2 deadline.
MTN Champs is Nigeria’s largest grassroots sports competition, a collaboration between MTN Nigeria and Making of Champs (MoC), providing a platform for young athletes to showcase their talents and potentially represent Nigeria on the global stage.
Osaze Ebueku, Senior Manager, Go-to-Market at MTN Nigeria at the opening ceremony of the MTN Champs Classics events in Benin had emphasised the long-term vision behind MTN Champs: “We’re building future Olympians for Nigeria. MTN Champs is about more than competition. It’s about changing lives.”
The continental relays mark the second leg of the MTN Champs Season 3, following the Classics competition in Benin, which saw 4,371 event entries from 2,056 athletes.
As of March 24, the Lagos leg had already recorded 2,821 event entries across different age categories, highlighting the growing enthusiasm around the competition.
The registered athletes are spread across four categories, with 174 in the Cadet (U-14) category, 388 in Youth (U-17), 270 in Junior (U-20), and 279 in the Senior category.
To ensure smooth participation, organisers have outlined important guidelines. Athletes in the Cadet, Youth, and Junior categories must submit a signed Parental Consent Form, while all registered schools and athletes must collect their competition bibs by April 8 at the competition venue to confirm their participation and secure their place on the start list.
Sports enthusiasts can look forward to an electrifying showcase of emerging talent, as young athletes seize the opportunity to prove their skills on a professional stage.
Telecom
Again, Labour Fumes, Threatens Shutdown of Telcos over Non-Implementation of 15 Percent Tariff Reduction
Nigeria Labour Congress (NLC) is threatening to shut down operations of telecommunications companies over their refusal to comment on the 15 percent reduction in telecom tariffs.
Recall that that organised labour, through the NLC, forced the federal government and NCC to reduce the telecommunications tariff hike from 50% to 35% after threatening to shut down telecom operations and the NCC in response to what it saw as exploitative economic policies amidst excruciating suffering, hardship, and deepening poverty.
The government had previously formed a 10-member committee, consisting of five government and NLC representatives, to deliberate on the thorny topic of tariff hikes within two weeks and report back before making a final decision on the new telecom tariff structure.
Consequently, on Friday, February 21, 2025, the committee, at a meeting conducted in the office of the National Security Adviser (NSA) that lasted nearly three hours, decided on a 15 per cent tariff cut.
According to reports, in accordance with the conditions of the agreement, an official communiqué announcing the tariff reduction was scheduled to be released on Saturday, February 22.
According to Chronicle,iIt was said that the meeting began at 4:00 p.m. and concluded around 7:00 p.m., during which NLC representatives insisted that the tariff hike be withdrawn.
According to sources, after significant pressure from NLC representatives in the 10-man committee, the government and NCC gave up and agreed on the 15% decrease, which the government or NCC should have announced the next day.
However, at the time of this report, no such announcement has been made.
Leaders of the labour union are not taking the government’s failure to announce or implement the 15% tariff decrease lightly, suspecting that they have been duped.
The Labour leaders have therefore resolved to directly confront the NCC and telecommunications operators next week.
Though it has been reported that the date for the start of the industrial action against the NCC and telecom providers has been set and mobilisation is underway, the information is being closely guarded.
One of the leaders of the NLC stated that “We have received directives to commence mobilisation since last week. In fact, the date for the commencement of industrial action against the NCC and telecommunication operators’ offices across the country has been fixed. We have been warned not to disclose the date because the plan is to take all concerned by surprise. We are not giving any notice because we thought we had resolved this matter over a month ago. It is as if we have been scammed. Therefore, we have decided to confront the matter head-on.”
On February 12, the NLC expressed outrage over telecommunications companies’ tariff hikes, despite an earlier agreement with the Federal Government and the NCC.
According to the Labour union, “If the telecommunications companies fail to revert to the old tariff by the end of February 2025, a total shutdown of their operations nationwide will commence on March 1, 2025.”
To demonstrate its seriousness, the NLC declared that, as a first step in resisting the arbitrary tariff hike, it directed that workers and other willing citizens boycott the services of MTN, AIRTEL, and GLO daily between 11:00 a.m. and 2:00 p.m. until the end.
On Tuesday, February 11, NLC leaders issued a communiqué at the conclusion of their Central Working Committee (CWC) meeting in Lokoja, Kogi State, urging workers and citizens to suspend data purchases from telecommunications companies, which have also become one of their most effective tools for exploiting Nigerian citizens.
The communiqué, signed by Joe Ajaero and Emma Ugboaja, Congress’ President and General Secretary, respectively, instructed NLC State Councils and industrial union affiliates to quickly sensitise and mobilise their members and the general public in their jurisdictions.
Titan Trust Bank Selects Oracle FSS for Core and Digital Banking Technology
IMF Appoints Elumelu, Nigerian Businessman to Advisory Council
NCS to Launch Electronic System for Cash Declarations at Airports
IHS Nigeria Hosts Telecom Industry Stakeholders to Discuss Protection of Critical National Infrastructure in Lagos State
Aquaterra Energy Secures Multi-million-dollar well Intervention Contract with Intrepid Energy in Nigeria
Telecom2 days agoAgain, Labour Fumes, Threatens Shutdown of Telcos over Non-Implementation of 15 Percent Tariff Reduction
News2 days agoNNPC Ready to Go to Capital Market for IPO- CFIO
E-Business2 days agoFG Launches Online Visa Approval Centre
E-Business2 days agoQNET Disassociates From Fraudulent Academy in Abuja, Supports EFCC Arrest
E-Business2 days agoFirm Discovers Sophisticated Chrome Zero-day Exploit Used in Active Attacks
E-Financial2 days agoFintech, Remittances Anchor Africa’s Booming Payments System
E-Business2 days agoNITDA Partners JICA to Launch Nigeria-Japan Startup Hub
Telecom2 days agoEverything You Need to Know About MTN’s MIP 2025 Fellowship Webinar